Sustainability website / Governance, Ethics and Engagement / Ethics

Xstrata’s Statement of Business Principles covers topics such as our commitment to uphold human rights, support free enterprise and operate with the maximum transparency commercially possible, as well as our prohibition of political donations and any form of fraud, bribery or corruption. Non-managed operations in which Xstrata has a stake are required to have policies and practices that align with our Business Principles. Suppliers, contractors and business partners are provided with a copy of Xstrata’s Business Principles before commencing work with the Group. The document is published in the 15 languages spoken by Xstrata employees and contractors and forms an integral part of induction processes. The Business Principles are supported by the specific commitments, expectations and guidelines set out in our policies, Sustainable Development Standards and procedures. A copy of the revised Statement of Business Principles is provided in the pocket on the inside back cover of this report.

Bribery and corruption

Bribery and corruption risks are assessed at all managed operations, including an assessment of the identified level of country or regional risks, the policies and practices of other companies operating in the region and the probity and transparency of government, suppliers, contractors and other business partners. Each managed operation is required to maintain appropriate controls to manage these risks. Xstrata’s internal audit function tests the adequacy of management controls and reviews the risk identification process on a quarterly basis as part of the Group’s risk management processes. Procurement of goods and services and interaction with regulators and government are two higher risk areas for potential bribery and corruption practices. Eight bribery and corruption incidents were reported through the Xstrata Ethics Line in 2007.

Free enterprise

Xstrata’s Business Principles set out our commitment to support free enterprise and compete fairly for business, with scrupulous regard for those regulations which promote competition and protect consumers. All relevant employees are required to complete Xstrata’s bespoke competition and fair trade web-based training programme annually and achieve a score in excess of 70%. The programme covers all major anti-trust and competition issues and uses simulated situations and questions to test employees’ understanding of competition law and appropriate behaviour when dealing with customers, competitors, trade associations, suppliers and distributors. No breaches of Xstrata’s policies or competition law occurred in 2007 and no fines were incurred.

Ethics Line

The Xstrata Ethics Line is a confidential ‘whistleblowing‘ facility operated independently of the Group by KPMG. The line exists for employees, contractors, suppliers, customers or business partners to report any breaches of Xstrata’s Business Principles, policies or prevailing legislation in confidence. A free phone number is provided for every country in which the Group has managed operations and calls are reported on an anonymous basis to the Global Head Internal Audit and Risk, who reports directly to the Audit Committee. Ethics line details are published on the back page of our Statement of Business Principles and are communicated throughout the Group.

In 2007, 17 incidents were reported through the Ethics Line. All reported incidents were investigated. Investigations into bribery and corruption charges against two Xstrata Alloys employees in South Africa confirmed these allegations and led to the termination of the employees’ contracts. Criminal proceedings have also been initiated. Investigations into two further alleged incidents of bribery and corruption remain ongoing.

The 17 incidents reported and investigated related to:

• Bribery and corruption (8);
• Unfair and discriminatory labour practices (7);
• Fraudulent practices (1);
• Unauthorised divulging of confidential information (1).